AppLovin (NASDAQ: APP) shares sank 11% on Wednesday after Fuzzy Panda Research unleashed a scathing short report, accusing the mobile ad-tech company of “Ad Fraud” and underhanded practices. Specifically, Fuzzy Panda points to the company’s machine-learning algorithm, Axon 2.0, claiming its success may hinge on unethical—and potentially illegal—activities like stealing data from Meta Platforms Inc (NASDAQ: META) and breaking app store rules enforced by Apple (NASDAQ: AAPL) and Google (NASDAQ: GOOGL).
The report dives into AppLovin’s expansion into e-commerce, alleging the company uses dubious strategies to get ahead. Fuzzy Panda says the company has been “reverse engineering” Meta’s data and mishandling consumer information in ways that violate the terms of service of major app stores. The short seller argues that these moves artificially boost its high click-through rates (CTRs) and revenue growth, painting a picture of deception rather than legitimate business prowess.
Among the most serious accusations, Fuzzy Panda claims to have found evidence of a “Direct Download” program tied to AppLovin. This program, they say, could allow the company to install apps on users’ phones without their permission. If proven, such a practice could draw heavy fines from regulators like the Federal Trade Commission (FTC). Worse yet, it might prompt Apple and Google to ban AppLovin’s software development kits (SDKs) from their iOS and Play stores—a move that could cripple the company’s operations.
This isn’t the first time AppLovin (NASDAQ: APP) has faced scrutiny from short sellers. Bear Cave previously targeted the company, and now Fuzzy Panda’s allegations add fresh fuel to the fire. The report threatens to overshadow the firm’s once-celebrated financial performance, raising doubts about the sustainability of its business model.
Investors have long praised CEO Adam Foroughi for steering AppLovin to impressive growth, but Fuzzy Panda warns that the company’s fortunes could shift dramatically. If tech heavyweights like Apple, Google, or Meta take action against the alleged misconduct, AppLovin’s foundation could start to crack. For now, the company has stayed silent on the report, leaving the market to grapple with the fallout as shares slide.
